What is this and how do I get rid of it?
The issue is being caused by the presence of an extra face inside the mug. Its a quick fix; in edit mode, select it and press  X  > Faces.



Also note that there's an Ngon near the base of the mug that could use some splitting, for uniformity's sake. In edit mode, select the top and bottom vertices and press  J .



This should do it, good luck!